Canceling Private Mortgage Insurance

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Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed past July of '99) goes below seventy-eight percent of the purchase price, but not at the point the borrower's equity gets to twenty-two percent or higher. (Certain "higher risk" loans are not included.) But you have the right to cancel PMI yourself (for loans made past July 1999) once your equity reaches 20 percent, no matter the original purchase price.

Do your homework

Keep a running total of each principal payment. Find out the prices of other houses in your neighborhood. Unfortunately, if you have a recent loan - five years or under, you likely haven't started to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

You can start the process of canceling PMI when you're sure your equity has reached 20%. Call the lender to request cancellation of your Private Mortgage Insurance. Your lender will request proof that your equity is high enough. You can get proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Ocean Mortgage can answer questions about PMI and many others. Give us a call: 408-823-2321.

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